Efficiency ($η$) Cannot Exceed 1
- Law of conservation of energy prohibits that.
A glider routinely creates 20x lift force than its propulsive force: the vertical component of gravity, which is sine angle of descent × weight. Is it's "efficiency" is greater than 1? Is it 20? Maybe more?
That's not its "efficiency" but the ratio of $\frac {Output\ Force}{Input\ Force}$ which is greater than 1. The same result can be obtained through reduction gears. Given enough leverage, you can obtain a million times more force (torque) than what you started with, but you can never obtain any more power than what you started with.
This reduction gear system may produce a million times greater torque, but it will also inevitably have a million times less rotational speed, such that their product (power) remains the same.
Similarly, a wing may produce much greater lift than drag, but the "lift power" of the wing is:
$\small{Lift\ power = Lift \cdot Velocity \cdot cosθ}$
- Since θ is $90°$ (lift is perpendicular to aircraft velocity), cosθ and thus lift power is zero. What is the propulsive efficiency of the wing? Zero - by definition.
Efficiency is not $\frac {Force\ Obtained}{Force\ Invested}$
efficiency is $\frac {Power\ Obtained}{Power\ Invested}$
Propulsive Efficiency ($η$)
This is the efficiency of conversion of power invested (shaft power) into thrust power.
$\large{η = \frac {Thrust\ Power}{Shaft\ Power}}$
Propulsive efficiency can never be greater than 1, since that violates the law of conservation of energy. In practice, it will always be less than 1 since there will always be inefficiencies.
$\small{Thrust\ power = Speed \cdot Thrust}$
$\small{Shaft\ power = Rotation\ Speed \cdot Torque}$
Therefore:
$\large{η = \frac {Speed \cdot Thrust}{Rotation\ Speed \cdot Torque}}$
This is the correct expression for propulsive efficiency. Note that speed here is in TAS.
Force and Power
In the question, it seems like it's being assumed that the L/D ratio of the propeller blades is its "efficiency". While it's true that both L/D ratio and $η$ are indicative of efficiency, both are fundamentally different:
L/D is a ratio of forces, η is a ratio of powers.
Let's understand $η$ graphically. For an engine operating at a constant power of 1 watt and an (unrealistic) propeller with $η = 1$, the thrust-speed graph1 looks like this:

This is the thrust boundary that, for the given power, cannot be exceeded (let's call this the "limit curve"). As speed reduces to zero, thrust that a 1 watt engine can produce tends to infinity. The opposite is true as speed tends to c (speed of light). By definition, 1 watt of power at a speed of 1 $m/s$ yields a thrust of 1 Newton.
Now let's compare this limit curve to the thrust-speed curve of a fixed pitch propeller driven by an engine at a constant power.

It can be seen that the limit curve is never trespassed, as prohibited by the law of conservation of energy.
It was earlier stated that $η = \frac{Thrust\ Power}{Shaft\ Power}$
$\large{η = \frac{T V}{P}}$
$\large{T = \frac {η P}{V}}$
If P and V are fixed, then $η$ only depends on T. Therefore, at a given speed:
$\large{η = \frac{T}{T'}}$
Where T' is the limit curve thrust for that speed.
Dividing T by T' is how we got the graph for $η$. The following features can be observed in this graph:
At $V_0$, $η$ is (always) zero. That is because the maximum thrust that can be produced at $V_0$ (thrust at $η=1$) tends to infinity.
$V_1$ is when $η$ is maximum - around 75% in this case. This is the cruise speed for which the propeller was designed - to provide maximum efficiency.
At $V_2$, $η$ is zero again, because the blades have reached their $α_0$ (zero-lift AoA). The maximum speed that can be attained in level flight for the given engine power is always less than this speed2.
The blades stall at $V_3$. (there will also be a very high speed at which the blades will experience a negative-stall.)
1 This graph is not directly applicable to engines that carry their own propellant (rocket engines).
2 The exact maximum speed can be calculated using math from this answer.